The Challenges And Countermeasures Of Margin Trading And Securities Lending Business In China

The margin trading and securities lending business can be describedas booming business in China`s securities market. It`s market sizecontinues to rise, the underlying securities has gradually liberalized andplaying its role to enhance the efficiency of capital markets. However, weshould clearly recognize the challenges in the business developmentprocess, such as the vicious competition may occur and the profitabilityof investors is not optimistic and so on. Using qualitative and quantitativeanalysis method, with strategic management theory and behavioralfinance theory, the logical derivation and data analysis to analyzeproblems and form solutions to this problem and to make somerecommendations for improvement.Through qualitative analysis, this paper presents the possible viciouscompetition of margin within the industry, investors involved in thetransaction profitability is not optimistic as the two main challenges, andthe crux of the problem boils down to one point, that is the profitability ofthe investor involved in margin trading business needs to be improved. By multiple regression and subgroup analysis of indicators of investors’behavior and rate of return, this paper reveals the relationship betweenrate of return and indicators of investors ’behavior such as the investors’average holding days, the number of varieties of securities transactions,concentration, stop win or stop loss and so on. Finally, this paperproposes a number of countermeasures such as to improve the systemconstruction, optimizing the structure of investors, intermediariesclassified service, and improve investor behavior.